Most people have heard of probate, but few people really know what it is. Probate is the process by which a court (which in New York will be the Surrogate’s Court) confirms that a Last Will and Testament has been executed in accordance with the law and is valid to affect how property will pass after death. Which brings us to the second thing most people aren’t aware of: that a Will has to be probated for it to take effect.
In New York, as a general rule, if an individual owns property in his or her name at the time of death, a proceeding must be commenced in court to probate the Will. Contrary to many people’s understanding, this proceeding is costly and can take considerable time to complete. Initially, the executor nominated in the Will must retain counsel to petition the court to formally be appointed himself or herself as the executor. This preliminary process alone can be time-consuming. The process can be made faster if the nominated executor obtains consents and waivers from all the other heirs and beneficiaries. The petition must also include the decedent’s death certificate, an original paid funeral bill, and the filing fee specified by the Surrogate’s Court. Once the court has formally appointed the executor, a certificate called “Letters Testamentary” is issued. Then, and only then, can the executor do anything with the decedent’s property - whether real property or personal property. The executor must then obtain a tax ID number for the Estate and open an account(s) in the Estate’s name. Assets can then be transferred into the Estate account. Once the assets are marshaled (collected), the executor may then pay the bills of the Estate and distribute the assets to the beneficiaries. The Estate should be kept open and some funds held in reserve for seven months to allow for creditors to file claims.When distributing assets to beneficiaries, the executor should prepare an accounting and present it to the beneficiaries together with receipts and releases to be executed by the beneficiaries in conjunction with the distributions. (Note that this is a summarization, and all of these steps should be taken with the guidance and assistance of counsel.)
When an individual dies without a Will, a similar procedure is necessary. This proceeding is called an Administration Proceeding. A significant difference in this situation is that the beneficiaries (called “distributees” in New York and commonly referred to as “heirs” everywhere else) of the decedent are determined by the state’s intestacy statute.
Over the years, I’ve found that clients are surprised by a couple things: One thing I’ve heard often is that many clients believe that if there is a Will, no court proceeding is needed. As set forth above, that is incorrect. The second surprise is the way in which the assets are distributed under the intestacy statute. For example, assume a family consisting of two parents and two minor children. In NY, if Dad dies without a will, the family might have expected everything to go to Mom. In fact, half of the assets plus $50,000 will go to Mom. The rest will go to the children. This is what we call an unanticipated result, and it could be an unwanted result if, for example, real property passes to minor children.
The important thing to take away from this summary is that it is wise to do a Will. See further articles for discussions on how to hold assets and how to possibly avoid the need to go to court at all.